It seemed to be going so smoothly, too. After years of debating and months of preparation, the Federal Trade Commission (FTC) finally had a rollout date for its much-ballyhooed Do Not Call Registry. The list, which contains more than 50 million phone numbers that would be off-limits to most telemarketers, was set to kick in October 1.
Just days before the launch, however, two federal court rulings derailed the registry. In the more damning of the two decisions, U.S. District Judge Edward Nottingham found that the list unfairly favored one kind of speech over another, since political groups and not-for-profits are exempt from the "don't call" prohibition. A few days later, a higher court ruled the FTC could enforce the list while it appealed Nottingham's decision.
Despite the legal wrangling, many observers believe the registry is a done deal. House Energy and Commerce Committee chairman Billy Tauzin (R-La.) and ranking member John Dingell (D-Mich.) were already looking at ways to overcome Nottingham's objections, and officials at the FTC appear convinced they will win the appeal. In a television interview after the Nottingham ruling, FTC chairman Timothy Muris said: "As the law stands now, I believe our list is constitutional, and I believe [it] will ultimately prevail."
Others agree, noting that widespread consumer anger about receiving unwanted telephone solicitations—often just as pie is being served—has triggered a groundswell of political support for the registry. Currently 27 states have active do not call lists, and most will transfer numbers from their lists if the national registry goes into effect.
In fact, executives in industries that do a lot of telemarketing (financial services and telecommunications are at the top of that list) say they expect the registry to become reality soon. Cleveland-based Key Bank, for instance, began honoring the list October 1. Notes Nessa Feddis, senior federal counsel for the American Bankers Association: "They have reconciled themselves to the list for the most part."
Reconciled is the right word. While telemarketers have long expected some sort of intervention by the FTC, the Do Not Call Registry is going to be a royal pain for many companies. For starters, it is only one part of a broader do not call rule. Several provisions, including one that bans telemarketers from hiding their phone numbers from caller ID, were not affected by Nottingham's ruling, and become law January 29.
Moreover, about 20 million households signed up for the registry. As James Watson, CEO of Chicago-based IT consultancy Doculabs Inc., points out, "the distribution of income levels in those households is going to be biased toward higher-income households. Everyone's calling those folks, so it makes it more complicated when you take the cream off the top."
Annoying as the calls are to consumers, there is a business cost to restricting them. The Direct Marketing Association says outbound telemarketing generates $106 billion in sales annually and employs 4.1 million people—many of whom are working mothers, minorities, or handicapped.
In addition, if businesses are unable to cold call their most prized consumers, they'll have to seek out other ways to pitch their products to them. While E-mail seems an obvious route, the recent hue and cry over commercial spam already has some legislators talking about a Do Not E-mail Registry. Even if such a list doesn't come to pass, Internet service providers—not to mention consumers—are getting a whole lot better at blocking junk E-mail.
So where does that leave direct marketers? In 1973, apparently. Indeed, some observers say the Do Not Call Registry, and a possible Do Not E-mail Registry, are likely to spur renewed interest in some old-style hawking of products. Andrew Gordon, president of lead-generation specialist Omega Advertising Inc., in Newton, Mass., predicts some businesses may turn to direct-response television to replace telemarketing. Gordon says he knows of one company, which had focused primarily on outbound telemarketing, that is now testing infomercials. "You're going to see a shift to broadcast direct-response advertising, particularly in television and radio," he asserts. "And infomercials are a component of that."
Meanwhile, other corporates may go in for an even more low-tech approach. Direct mail—tarted up with fancy bindings and loads of color—could be headed for a revival. "Businesses and consumers are comfortable with it," says Watson. "So we're going to fall back to the way we were."